California’s tech capital has turned its attention toward one of Silicon Valley’s biggest companies. Santa Clara County sued Meta Platforms on Monday, accusing the social media giant of profiting from scam advertisements on Facebook and Instagram while failing to stop fraudulent activity at scale.

The lawsuit, filed in Santa Clara County Superior Court, claims Meta violated California false advertising and unfair competition laws. County officials say the company knowingly allowed scam ads to thrive because they generated billions in revenue. The complaint seeks restitution, civil penalties, and a court order blocking Meta from continuing the alleged practices.

Internal documents revealed

The lawsuit relies heavily on leaked internal company documents first reported by Reuters last year. According to the complaint, those records suggest Meta generated as much as $7 billion annually from “high-risk” advertisements that displayed obvious signs of fraud.

County officials argue Meta chose profits over enforcement. Rather than aggressively removing fraudulent advertisers, the county alleges the company created internal “guardrails” that limited anti-scam efforts whenever enforcement threatened advertising revenue.

“The scale of Meta’s misconduct has reached an extraordinary level, and it needs to stop,” County Counsel Tony LoPresti told Reuters. “As civil prosecutors in Silicon Valley, we have a special duty ‌to hold ⁠tech companies accountable to the law.”

The lawsuit also claims Meta allowed intermediaries to sell protected advertising accounts to bad actors. Those accounts allegedly received reduced enforcement scrutiny, making it easier for scammers to continue operating.

Scam ads targeted users

Santa Clara County further alleges Meta’s advertising systems amplified fraud by targeting scam ads toward users who previously interacted with suspicious promotions. The complaint points to Reuters testing that allegedly showed Meta’s generative AI tools assisting unethical marketers in producing fraudulent advertisements.

The company previously denied claims that it intentionally accepted scam advertising to protect revenue streams.

“We aggressively fight fraud and scams because people on our platforms don’t want this content, legitimate advertisers don’t want it and we don’t want it either,” a Meta spokesman told Reuters last year. County lawyers argue those public reassurances form part of the alleged deception.

According to the complaint, Meta repeatedly told users and advertisers that it rigorously reviewed ads and prioritized scam prevention. Santa Clara County claims those statements concealed how deeply fraudulent advertising allegedly contributed to company profits. The lawsuit includes another striking allegation.

“On information and belief, Meta can even adjust the flood of scam ads it allows on its platforms in order to smooth its earnings or hit specific revenue targets,” Santa Clara’s filing states.

Santa Clara County will lead the lawsuit alongside three outside law firms: Bernstein Litowitz Berger & Grossmann, Renne Public Law Group, and Bishop Partnoy.

LoPresti said the county will maintain full control over litigation decisions. The outside firms will only receive payment if the county wins the case. The lawsuit marks one of the most aggressive legal actions yet targeting alleged scam advertising practices inside major social media platforms.